Villa Hills seeks vehicle license fee alternatives

VILLA HILLS – City leaders are continuing their efforts to replace the city's vehicle license fee.

As previously reported, the county, which collects the fees for the city, is not renewing the software that enables it to manage the fee collection.

Villa Hills had an $8 vehicle fee "for a long time" before increasing that cost to $40 in 2006, Mayor Mike Martin told the Community Recorder in January. The county took over the fee collection in 2012.

The city typically collects about $200,000 from the fee with the money raised restricted for roads.

The proposed long-term solution would be a ballot initiative, putting a property tax to the residents for a vote.

Councilman Jim Cahill said in a March 3 phone conversation the property tax will take the place of the vehicle license fee and the way the city handles the money that will come in "will be identical."

The proposal calls for a property tax totaling 3 cents per $100 valuation. For example, Cahill said a resident with a $100,000 home will pay $30 a year.

"I don't want to give anybody the impression that we're raising taxes," Cahill said during the council's Feb. 26 meeting. "We're not. We're changing from a vehicle license fee to a restricted property tax for exactly the same amount of money."

City council members didn't vote on the tax but there were no objections about the proposed ballot initiative. Cahill said the decision to include it on the ballot will need an official vote by the council.

If voters approve the property tax this November, they won't be billed until October 2015, leaving about a "one-year lag time," Cahill said.

To make up the loss in revenue, council approved on a 5-1 vote to increase the insurance premium tax from 5 percent to 7 percent. Councilwoman Holly Isenhour cast the lone no vote.

The insurance premium tax "is a short-term stop gap" to fill the funding gap between the time the county stops collecting the vehicle license fee and when the voter-approved property tax can be billed and received, Cahill explained March 3.

The insurance tax will start on July 1 and end June 30, 2015, and is expected to generate about $170,000. According to Cahill, the $30,000 shortfall will be covered by the surplus the city anticipates at the end of the current fiscal year.

"All we're trying to do is keep the same level of (road) maintenance we've had in the past," he said.

The insurance premium tax could be reduced at the end of the council's term in December.

"In theory we would have time to do that," Cahill said. "I can't promise we'll do it in case the property tax is not approved."

The city spends a minimum of $400,000 on roads and if they lose the ability to collect the vehicle license fee, that could potentially be cut in half, said Cahill.

He said Villa Hills "can't ignore the maintenance of the roads."

According to Cahill, after the county stops collecting the fees, the city will continue to collect vehicle license fee through the end of the calendar year and maybe longer if the ballot initiative fails.

Mayor Martin, who was not at the meeting, said when asked about the insurance premium tax that he hasn't had a chance to "digest it," but added "off the top, I'm not against it at all."